Personal finance: Don't get in a spin over PMI

HAVING children often makes parents painfully aware of their own health and mortality. Many would love to take out private medical insurance as a way to give their family the best possible care, but assume the costs are prohibitive.

That isn't always the case - there are ways to find an affordable policy, as long as you check carefully to make sure what you buy meets your specific requirements.

First, the number of children in a family affects the cost of premiums dramatically, so it is wise to check whether insurers charge for each child, or whether the whole family receives protection under a single rate. Children are usually covered until they are 21.

Budget plans are the big sellers in the medical insurance market. They keep costs down by cutting out the frills and concentrating on paying for in-patient care. That means many do not cover out-patient services, possibly the most useful perk for working parents.

Comprehensive policies cost a lot more (see box below) and include a much broader range of benefits, including cover for the cost of in-patient diagnostic tests, surgeons' fees, and hospital accommodation.

Routine pregnancy and childbirth are not always covered in comprehensive products but serious complications such as caesarean sections and ectopic pregnancies sometimes are. Treatment and costs are not always easily comparable because each insurer does things differently, especially rates for single parents. For example, there are three different subscription rates on Bupa's main policies, BupaCare and EssentialCare: single, married (two adults) and family. The family rate includes a single rate for children, regardless of how many there are. Single parents are charged at the married rate.

The cheaper Bupa LocalCare policy calculates subscriptions on a per- person-covered basis. This package is aimed at people who want low-cost cover and you have to be treated at a hospital within Bupa's network.

All insurers will charge you extra if you want an unrestricted choice of hospital. If you do have to travel to be near a hospital, Prime Health's Primecare pays for parents' accommodation if they wish to stay near hospitalised children aged 14 and under.

A big part of the attraction of private medical insurance is knowing there is no need to wait for routine procedures. Philip Fowles, sales and marketing manager at BCWA, says: "Medical insurance comes into its own with elective surgery which you would normally have to wait for." Elective surgery encompasses common childhood operations like tonsillectomies.

Picking the right policy can be hard, as many policies are not described very clearly in promotional literature. Bupa says it has been rewriting its products over the last year so consumers can see precisely what is covered and what is not but admits there is still some way to go.

The best bet for harassed parents is to decide what you want from a policy, then get some brochures and ask questions. Remember that prices will rise as you get older. Only OHRA guarantees not to raise prices except in line with inflation.

Allison Carvalho is assistant editor of `Insurance Age' magazine.

The cost of private health care

Unless stated otherwise, all figures assume cover is for parents aged 40 with two children under 16.

Norwich Union Healthcare, 0800 400123

Budget - Personal Care policy. The policy charges the same regardless of how many children you have. Total premium is pounds 84.05 per month, pounds 1,008.60 per year.

Comprehensive - Express Care policy. Children are charged under this policy. Total premium is pounds 164.76 per month, pounds 1,977.12 per year.

BCWA, 0500 826826

Children covered free up to the age of 21.

Budget - Vital policy. Monthly premium of pounds 68.63, annual payment pounds 784.31. Excess ranges from pounds 100 to pounds 350.

Comprehensive - Preferential policy. Monthly rate is pounds 129.87, annual payment pounds 1,484.25. Excess options range from pounds 60 to pounds 300.

OHRA, 01703 620620

Third and subsequent children are insured free on both policies. Premiums increase with inflation only (no age related rises). Includes children up to the age of 18. This is extended to 26 if they remain in full-time education.

Budget - Medios Optional policy. Monthly premium pounds 41.60, annual payment pounds 474.85.

Comprehensive - Medios Executive 2000 Plus policy. Monthly premium pounds 111.01 with no excess. One annual payment of pounds 1,265.47. Or a monthly premium of pounds 61.05 or one payment of pounds 696.01, with an annual excess of pounds 676 which falls by one third for each claim-free year.

Prime Health, 0800 779955

All children in full-time education are covered up to the age of 21, unless they get married.

Budget - Primecare Supersaver policy. pounds 60.13 per month. Or annual payment of pounds 667.39.

Comprehensive - Primecare policy. pounds 99.11 per month. Or annual payment of pounds 1,100.06.

Bupa, 0800 600500

Budget - Bupa Local Hospital Care policy. Paid individually. Total premium for family of four: pounds 70.18 monthly, no discount for annual payment.

Comprehensive - BUPA Essential Care policy. Children free until the age of 24 if in full-time education. Monthly premium of pounds 84.43. Or annual payment of pounds 1,013.13. Does not cover costs of initial outpatient consultations.